Government Contracts, Investigations & International Trade Blog : Government Contracts Lawyer & Attorney : Sheppard Mullin Law Firm : Bids, Licenses, Awards, Conflict of Interest.

With the elimination of the IR&D and B&P ceiling a decade or so ago and the recognition of “dual use” technologies as appropriate subjects of IR&D, contractors have tended to place questions relating to the allocability of IR&D on the back burner. True, the old concurrency issue remained, but allocability seemed to be relatively non-controversial. Based upon a COFC decision issued earlier this year -- and to quote Bob Dylan -- “The times they are a changin.’”
 

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The Administration has conceded that the American Recovery and Reinvestment Act (“ARRA”) has not worked as planned. With unemployment numbers continuing to climb, the Administration now acknowledges it “misread the economy.” But from the beginning not everyone believed ARRA would achieve the desired stimulative effect. After all, $787 billion cannot be disbursed without some complication.
 

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In November 2002, the FAR Councils eliminated the so-called "paid cost" rule from the FAR, which had previously prevented federal prime contractors other than small businesses from recognizing incurred subcontractor costs for purposes of progress billing until "payment by cash, check, or other form of actual payment" had actually been made. See 67 Federal Register 70520 (Nov. 22, 2002). The Government form used to request progress payments, the Standard Form (SF) 1443, Request for Progress Payments, implemented the paid cost rule by requiring large contractors to identify "paid costs eligible under progress payments clause" (Line 9) and "incurred costs eligible under progress payments clause" (Line 10). See FAR 53.301-1443 (2008) (last updated in October 1982). Bizarrely, however, when the paid cost rule was eliminated in 2002, the SF 1443 was not updated to remove these two lines. Now -- a mere six years and eight months since the elimination of the paid cost rule -- the FAR Councils have finally issued a revised SF 1443, removing Lines 9 and 10 and thereby eliminating the last vestiges of the long-defunct rule. See 74 Federal Register 28430 (Jun. 15, 2009).
 

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On June 16, 2009, Taiwan (aka Chinese Taipei) took the penultimate step in acceding to the World Trade Organization's Government Procurement Agreement (WTO GPA), which will eventually grant Taiwan "free trade partner" status under the Federal Acquisition Regulation (FAR) and allow companies selling to the U.S. Government to deliver products that are manufactured in Taiwan. The accession process is expected to be complete by July 15, 2009. After that date, and once the FAR is updated accordingly, "Made in Taiwan" will finally be an approved country of origin for products and services delivered to the U.S. Government.
 

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• China Continues to Dawdle

  Costa Rica, Peru, and Oman also Recognized

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On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5), known popularly by a variety of names, including “ARRA,” the “Recovery Act,” and the “Stimulus Act.” We have previously discussed many of the provisions relating to the Recovery Act at some length, especially the implementing regulations that were recently published this spring.
 

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• PRC Stimulus: "Buy Chinese"

  Canada and WTO: "Not Pleased"

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While the promise of the $787 billion federal stimulus package is no doubt alluring to many companies, receiving Stimulus funds does not come without strings attached, posing risks for the unwary recipient.
 

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